A reader notices a self-serving nudge in restaurants

Thaler and Sunstein did not invent the idea of nudging, which has existed at least since Eden when the Serpent nudged Adam to take a bite of the apple. Individuals, companies, and governments often nudge us for self-serving reasons. One of Thaler and Sunstein’s hopes in writing Nudge was (and is) to alert readers to nudges that surround them daily, and to be wary of the self-serving variety. Reader Matthew McClain recognizes an excellent example from the world of restaurant dining.

Many receipts in U.S. restaurants inform the customer what a tip of 15%, 20%, and 25% would be. This subtly sends a message that 20% is the middle, typical, or standard tip. Moreover, on many receipts these amounts are calculated from the post-tax bill. Tips are/were customarily calculated from the pre-tax amount. Few customers catch this, as the service is supposed to spare us the math in the first place.

In my humble opinion, these nudges are not in the spirit of libertarian paternalism. The first intentionally misrepresents the nature of the social norm. It doesn’t say, “Hey, maybe if you thought about it or were fully rational you would give a bit more.” It says (falsely), “The norm is to give more, and you’re a jerk if you don’t.” The second, at best, obscures the pre/post-tax decision from the customer. At worst, it is the kind of mathematics we’re used to dealing with from car salesmen.

Finally, I am skeptical that higher tip rates will yield higher net wages for service employees. Rather, this phenomenon is likely helping to mask inflation in restaurant prices. It will take time and experience for the public to internalize that the surcharge (over the quoted price) of eating out has increased.


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